Judgment 1. THIS application under Art. 226 is directed against an order of the Review Committee of the Vishnupur Municipality, of the 21st May, 1959, by which they have assessed the valuation for the petitioners' holding no. 288 (new) at Rs. 12,800/- by an order dated 21. 5. 59, modifying the valuation originally made by the Assessor. The Petitioners' case is that the holding belongs to the deity Sri Iswar Laxmimata Thakurani and a cinema house has been constructed by the funds of that deity and that the holding, together with the cinema house, has been leased out to the Petitioners, Kalipada Dawn and others at an annual rent of Rs. 240/-, by a registered deed. The previous assessment for the holding was made in 1953 and the annual value of the holding at that time was assessed at Rs. 3,780/- only. Under sec. 137, a revision of the valuation for the next period commencing from 1959 was made by an Assessor who raised the annual valuation from Rs. 3,780/- to Rs. 15,360/ -. Aggrieved by this enhancement in the valuation the Petitioners applied for a review under section 148 and the Review Committee, appointed by the Municipality, to hear, the Petitioners' application for review, reduced the valuation from Rs. 15,360/- to Rs. 12,800/ -. 2. THE petitioners are not satisfied with this reduction and, according to them, the enhancement from Rs. 3,780/-to Rs. 12,800/ - has been made arbitrarily without any valid material to support this high assessment. The revised valuation, according to the Petitioners, is in contravention of sub-sec. (2) of section 128 of the Bengal Municipal Act (hereinafter referred to as the 'act'), and the provisions of rules 8, 10 and 14 of the Rules framed under the Act. In the affidavit, filed on behalf of the Respondents, the Petitioners' allegation that they are lessees of the alleged deity is denied and it is contended that the valuation has been duly made under sub-section (1) of section 128 on the basis of the gross annual rental at which the holding may reasonably be expected to let and not on the basis of the annual value of the holding, as referred to in subsection (2) and it is contended that there was nothing arbitrary in the assessment made on the basis of the annual expected rental of the cinema house and other structures, which stand on the holding. I must, at the very outset, observe that sub-sec. (2) of sec. 128 of the Act has no relevance in the facts of this case, because that sub-section is attracted where the "gross annual rental", as referred to in sub-section (1) of that section "cannot, in the opinion of the assessor, be easily estimated or ascertained". In the present case, it is the ease of the Petitioners that the holding has been let out to them at a rental and the rent which may be reasonably expected in respect of a holding used as a cinema premises can also be ascertained. The Respondents also do not seek to support the impugned valuation under sub-sec, (2), but rely on sub-see. (1) of the section. We may, therefore, part with sub-section (2) at this initial stage. 3. THE real question for determination in this case is whether the valuation has been made in terms of sub-sec. (1) of sec. 128, which lays down the basis of the statutory power of the Municipality to make the assessment in question. Sub-section, (1) of sec. 128 is in these words: "the annual value of a holding shall be deemed to be the gross annual rental at which the holding may reasonably be expected to let." 4. THERE is little doubt that if the valuation has not been made on the basis of the "gross annual rental at which the holding may reasonably be expected to let", the valuation and all subsequent proceedings shall become ultra vires and that as against such ultra vires action not only a declaration and injunction under the general law [of. (1) Gordhandas v. Municipal Commr, A. I. R. 1963 S. C. 1742] but also a writ order in the nature of mandamus under Art. 226 will lie [cf. (2) Second Addl. I. T. O. v. Atmala, (1962) S. C. (C. A. 410/61. (3) Himmatlal v. State of M. P. (1954) S. C. R. 1122 (1128. (4) Berar Swadeshi Banaspati v. Municipal Committee, (1962) 1 S. C. R. 596 ; (5) Union of India v. D. O. M., (1962) S. C. [C. A. 168/60]. Though we have no guide from the Act itself as to how the annual rental payable by a hypothetical tenant is to be assessed, Rules have been framed under sec. (4) Berar Swadeshi Banaspati v. Municipal Committee, (1962) 1 S. C. R. 596 ; (5) Union of India v. D. O. M., (1962) S. C. [C. A. 168/60]. Though we have no guide from the Act itself as to how the annual rental payable by a hypothetical tenant is to be assessed, Rules have been framed under sec. 215 (a)- (b) of the Act for the guidance of the Assessor and the Review Committee in exercising their powers of assessment or valuation under the Act. Rule 8 (a) of these Rules, which deal with the question of gross annual rental is as follows:- "8. (a) For the purpose of ascertaining the gross annual rental at which a holding may reasonably be expected to let comparison may be made with the rents of similar holdings in the vicinity. Regard may also be had to the rent which might reasonably be expected in an average year or taking one year with another, and not in any particular year. The rental of the holding in the past or in the future is immaterial, and a hypothetical tenant shall be assumed to use the property in the same way as the actual occupier, and to have the same facility for deriving profit from it, no more or no less." 5. THIS rule, which is binding upon the Aessessor as well as the Review Committee, by reason of rule 14, appears to have been drafted in the light of the observations made by the Madras High Court in (6) Secy, of State v. Madras Municipality, I. L. R, (1886) 10 Mad. 38, while interpreting a similar expression relating to gross annual rent in section 123 of Madras Act I of 1884. The Rule says that the hypothetical tenant should be assumed to use the premises in the same way as the actual occupier. In other words, the assessing authority is to ascertain the hypothetical letting value for the disputed premises as a cinema house or the rent a hypothetical tenant would be willing to pay for hire of the premises to be used as a cinema house. In ascertaining that hypothetical figure, he is directed to take into consideration (a) the rents of similar holdings in the vicinity ; (b) the rent which may be expected in an 'average year' as distinguished from the rent actually paid in any particular year. In ascertaining that hypothetical figure, he is directed to take into consideration (a) the rents of similar holdings in the vicinity ; (b) the rent which may be expected in an 'average year' as distinguished from the rent actually paid in any particular year. The Madras decision makes it clear that if comparable premises of like use are available, that should be the primary guide in the quest of the rent which a hypothetical tenant would be willing to pay for the premises in question. This view is also supported by rule 10, of the same Rules which emphasises the comparable aspect and enjoins the Assessor to make it clear in his assessment list as to how the rental assessed by him compares with other comparable premises. Rule 10 says "the assessment list prepared by the Assessor shall be submitted with a brief report to the Commissioners showing the basis on which he has prepared the list, e. g., it should compare different areas and streets or even parts of a street and show why properties in them differ in value. Further each actual assessment shall be accompanied by a note showing how he has arrived at it, comparing the property in question with other similar property, and explaining why the assessment differs, if it does. " 6. BUT, in the case before me, it is evident that the Assessor made no attempt to find out any comparable premises and also that the Review Committee, who are as much bound by Rule 8 as the Assessor, uttered not a word as to the rental of comparable premises. The Review Committee has done nothing more than reducing, in lump, the figure of valuation from Rs. 15,360/- to 12,800/- (Ann. H. It was stated before me that there is no other cinema house within the Vishnupur Municipality. But the Rules do not preclude the Municipality from looking into the rent payable by cinema houses in the neighbourhood, though they may be outside the jurisdiction of the assessing Municipality. Nothing requires the Respondents to enquire how other Municipalities are assessing the annual rent of cinema houses. But the Rules do not preclude the Municipality from looking into the rent payable by cinema houses in the neighbourhood, though they may be outside the jurisdiction of the assessing Municipality. Nothing requires the Respondents to enquire how other Municipalities are assessing the annual rent of cinema houses. But the Respondents are under a legal obligation to ascertain what rent lessees of such premises are prepared to pay and in that quest the Respondents are not precluded from stepping outside the limits of their jurisdiction, if there are no other comparable premises within their own territory. The excuse of not referring to the standard of comparable premises at all is not, therefore, a valid excuse. Of course, even after looking into the rents paid by comparable premises in the vicinity, the Respondents may not necessarily be pinned down to any of the figures relating to such premises and would be at liberty to make such variations as may be justified by situation, amenities and other relevant considerations ; but that is a different matter. Of course, in England, questions as to the admissibility and evidentiary value of the rent payable by comparable premises have arisen from time to time [vide (7) Pointer v. Norwich Assessment (1922) 2 KB. 471 (C. A.)], simply because there was no statutory provision requiring that comparable premises should be considered in making the assessment as regards the rent that might be offered by a hypothetical tenant in respect of the disputed premises. But such questions do not arise where, as in the case before me, the statutory Rule itself requires the assessing authority to compare "the rents of similar holdings in the vicinity". No doubt, there are observations in the English case just cited [ (7) (1922) 2 K. B. 471 (477)] which might suggest that reference to comparable premises may be made only when they are situate within the jurisdiction of the assessing local authority. But that this is not a rule of exclusion will be evident from foot-note (q) to p. 80 of Vol. 32 of Halsbury's Laws of England, 3rd Ed, where it is stated that even in England, in the case of some classes of hereditaments "comparables may be drawn from the whole country". But that this is not a rule of exclusion will be evident from foot-note (q) to p. 80 of Vol. 32 of Halsbury's Laws of England, 3rd Ed, where it is stated that even in England, in the case of some classes of hereditaments "comparables may be drawn from the whole country". Of course, when the comparables are situate within the territory of the assessing local authority itself, the evidentiary value of the rent of the comparable premises is enhanced. But the evidentiary value does not become nil merely because the comparable premises are outside the local area of the assessing authority. Rule 8 (a), with which I am concerned, does not say that the 'similar holdings' must be within the jurisdiction of the assessing Municipality. Only two tests are to be satisfied in order to bring a comparable premises within the purview of the assessable premises, namely, that it must be similar and that it must be 'in the vicinity' of the assessable premises. Now, in the present cases, the Petitioners' case is that there are similar cinema houses in the district town of Bankura. We do not know how far they are away from the assessable premises so as to take them off from the conceptual limit of 'vicinity', having regard, at the same time, to the fact that there are no cinema houses within the jurisdiction of the Respondents. But merely because those cinema houses are administered by different municipal authorities they do not cease to be comparable. Nobody suggests that the Respondents would be bound to accept as conclusive the standard furnished by the comparable premises referred to by the Petitioners. The Respondents would always be at liberty to make variations from that standard having considered the degree of 'similarity' and 'vicinage'. But there its no legal justification for not 'considering' them. 7. THE Petitioners have given in their Affidavit the annual valuation of two cinema houses within the Municipality of Bankura, which is the headquarters of the District of which Vishnupur is a sub-division. The annual valuation of those two cinemas is Rs. 2400/- and rs. 3000/ -. There is much force in the contention made on behalf of the Petitioners that the cinema houses in the District town being better situated may be reasonably expected to fetch a better rental. The annual valuation of those two cinemas is Rs. 2400/- and rs. 3000/ -. There is much force in the contention made on behalf of the Petitioners that the cinema houses in the District town being better situated may be reasonably expected to fetch a better rental. At any rate, the valuation of the disputed cinema house at the high figure of Rs. 12,800/-, in the background of a comparable standard of Rs. 3000/- must be held to be arbitrary and unreasonable, in the absence of any materials or reasons to justify the wide difference. Assuming that the Respondents' contention that there being no comparable holding in the Municipality, the Respondents need not travel outside their jurisdiction in search of a comparable permises is correct, even then the impugned valuation would be ultra vires, because the Respondents having rejected the other standard offered by the rent alleged to have been actually paid by the Petitioners, the disputed holding may constitute a case where the "gross annual rental" referred to in sub-sec. (1) cannot be easily estimated or ascertained, and the provisions of sub-sec. (2) of section 128 and Cl. (b) of rule 8 of the Rules would at once be attracted. But the valuation made by the Respondents, as will be presently shown, has been made neither on the basis of the rental of comparable premises nor on the basis of the value of the building in question as required by sub-sec. (2) of section 128, and the impugned valuation would be ultra vires in any view of the matter. 8. WHAT the Respondents have purported to do is to determine the "gross annual rental" on the basis of the 'profits test', i. e., on the basis of the profits which the hypothetical tenant might be expected to earn if he runs a cinema business in the disputed premises. The building has a seating capacity of 800 and the Assessor has assessed the daily rent expected from the building, on this basis, to be Rs. 40/- (vide para 5 of the Application. There are several objections to the method thus adopted. The building has a seating capacity of 800 and the Assessor has assessed the daily rent expected from the building, on this basis, to be Rs. 40/- (vide para 5 of the Application. There are several objections to the method thus adopted. In cases where in England the 'profits test' or, more correctly, the 'volume of business' test has been adopted, it has been adopted because of two reasons: (a) that in respect of the premises in question it was not possible to as certain a market value; (b) that there was no statutory provision as to an alternative method of assessing the annual value or annual gross rental that can be reasonably expected from a hypothetical tenant. Two House of Lords decisions may be referred to in this context. The first is (8) Cartwright v. Sculcoates Union, (1900) A. C. 150. This related to a licensed public-house. As the report shows, there was no statutory guide to ascertain the rent a hypothetical tenant could reasonably be expected to pay for the public house. Their Lordships opined that the amount of business that the public house was doing was a thing which the hypothetical tenant would consider in offering the rent he would be prepared to pay far the premises and that there was nothing wrong in taking that factor into consideration. In the case before us, rule 8 (a) gives the statutory guide as to how the rent of the hypothetical tenant is to be ascertained, for the purposes of sub-sec. (1) of section 128 and that makes all the difference. The second case is (9) Mersey Docks v. Birkenhead Assessment Committee, (1901) A. C. 175. It is clear from the judgment of the Earl of Halsbury and the statements at p. 177 of the Report that what the Assessing Authority was required to do by the relevant statute in that case was to "estimate the net annual value. . ., that is to say, of the rent at which the same might reasonably be expected to let from year to year. . . ", and there was no further statutory guide as to the method to be adopted in order to make this estimate. There were also 'no similar tenements in this neighbourhood'. There was no letting and the tenements were used by the owners for the business "of a slaughter-house. . . ", and there was no further statutory guide as to the method to be adopted in order to make this estimate. There were also 'no similar tenements in this neighbourhood'. There was no letting and the tenements were used by the owners for the business "of a slaughter-house. The Assessing authority considered the valuation given in the return of the assessee as too low and raised it in consideration of the value of the volume of business carried on in the premises along with other factors. The House of Lords affirmed such valuation while making it clear that what the statute required was to tax the premises, not its business, profits or income, but that where comparable premises were not available, the volume of business might be taken into consideration in estimating the annual value of the premises. The comments made by me as to the earlier case would be applicable to this case as well. The freedom, in England, to apply any reasonable method arises from the fact that "there is no rule of law as to the method of valuation to be adopted for rating" [halsbury, 3rded., Vol. 32, para 106]. It may also be mentioned that even in England, it has, been established that 'profits' are an element to be taken into consideration in assessing the rent that may be reasonably expected from a hypothetical tenant, but they cannot be taken as the sole basis of the assessment, to the exclusion of all other factors, except in a most exceptional case [vide (10) Surrey County v. Chessington Zoo, (1950) 1 All. E. R. 154 (161. 9. I cannot say that the 'profits' test is altogether irrelevant in making the valuation under section 128 (1) of the Bengal Municipal Act, for it requires the authority to determine the 'gross annual rental at which the holding may reasonably be let' and rule 8 (a) says that in estimating the rent that may reasonably be expected from the hypothetical tenant, the "hypothetical tenant shall be assumed to use the property in the same way as the actual occupier, and to have the same facility for deriving profit from it". This recalls the observation of Lord Halsbury in the Cartusight case [ (1899) 1 Q. B. 667 (673) that to ascertain what a tenant might reasonably be expected to give "all that could reasonably affect the mind of the intending tenant ought to be considered". Rule 8 (a) does not exhaustively specify the factors that the authority will have to consider in making his assessment. His statutory duty is to estimate the rent which a hypothetical tenant may reasonably be expected to offer, having regard to all considerations as may be relevant thereto, starting with comparable premises, as required by the Rules. But he cannot ignore comparable premises altogether. Hence, where the premises are being used for earning profit, the authority may take into consideration not only comparable premises, the rent actually paid by the occupier but also what intending lessees of a cinema house might be expected to offer for the assessable premises. But this cannot be done by simply guessing the profits that may be derived by a maximum sale of tickets for the seats available in the disputed cinema house, as has been done by the Assessor in the case before me. Further evidence from would be tenants and the like must be taken before coming to the assessment on the basis of the supposed profits. As observed by Lord Macmilan in (11) Robinson Bros. v. Houghton, (1938) 2 All. E. R. 79 (87) H. L., in a case like this: "it is for the valuing authority to arrive at their valuation on the whole evidence, including evidence as to extent of the demand for public-houses in the district, the parties likely to compete for them, whether brewers or others, the rents which these competitors of all classes would be likely to offer, and all other relevant consideration". 10. IT is patent that neither the Assessor nor the Review Committee in the case before me adverted to any of those relevant considerations and based their assessment primarily on conjecture. The impugned assessment is thus liable to be quashed on this ground as well. In this context, we should refer to the word 'reasonably' in sec. 128 (1. In interpreting a similar expression in section 127 (a) of the Calcutta Municipal Act, 1923, the Supreme Court has in (12) Corporation of Calcutta v. Padma Debi, A. I. R. 1962 S. C. 151 laid emphasis on the word 'reasonably'. In this context, we should refer to the word 'reasonably' in sec. 128 (1. In interpreting a similar expression in section 127 (a) of the Calcutta Municipal Act, 1923, the Supreme Court has in (12) Corporation of Calcutta v. Padma Debi, A. I. R. 1962 S. C. 151 laid emphasis on the word 'reasonably'. It was explained that what was to be found out in assessing the amount of rent indicated by the expression was the rent which a landlord may be expected to get in the open market. The standard of rent payable by comparable premises in the locality comes in because of the concept of letting in the open market. But this standard, again, is controlled by the word 'reasonably' which fixes the upper and lower limits of the assessment which would be valid under the statute. The Supreme Court observed that the maximum limit suggested by the word 'reasonably' implied that the rate prevailing in the open market could not include what is known as the 'black market'. Hence, in times of a capricious market which necessitated legislative control, the hypothetical rent which could be reasonably expected for the purposes of the statutory assessment could never exceed the standard rent of the holding as assessed under the Rent Control Act, recovery in excess of which was penalised by the statute. As stated by me earlier, the Assessor, in the case before me, ignored the test of comparable premises altogether, and arrived at a figure on the process of a guess-work as to the volume of business or profits which cannot but be said to be arbitrary and that figure, when compared with the two comparable figures referred to in the affidavit of the Petitioners, cannot be said to be the rent which may be 'reasonably expected' from a hypothetical tenant, without proper evidence. As to the lower limit suggested by the word 'reasonably', we get light from the judgment of Lahiri, J. in the same case, reported in A. I. R. 1957 Cal. 466, which was affirmed by the Supreme Court in (12) A. I. R. 1962 S. C. 151. There his Lordship observed that the Municipality is not bound to accept the actual rent paid for the holding as the 'reasonable rent'. 466, which was affirmed by the Supreme Court in (12) A. I. R. 1962 S. C. 151. There his Lordship observed that the Municipality is not bound to accept the actual rent paid for the holding as the 'reasonable rent'. The reason is patent, namely, that the statute does not make the actual rent the basis of the valuation but the rent that may be reasonably expected from the hypothetical tenant [vide (14) Poplar's case, (1922) 2 A. C. 93 (103; 107-8)]. Hence, where the actual rent is considered as lower than the rent which may be reasonably expected, the Municipality is at liberty to assess the reasonable rent for the purposes of the assessment at a rate higher than the rate at which it is being actually paid. In this case, the Petitioners state that they took lease from the Paricharika of the Deity by a registered deed. On behalf of the Respondents, complaint was made of the fact that the Petitioners did not produce that deed. Without encouraging this default on the part of the Petitioners, it must be observed that the Assessor did consider the Petitioners' case that they were paying a yearly rent of Rs. 240/- but that that case was rejected by the Assessor on a priori considerations. He disbelieved the Petitioners' case on the ground that "it is against the ordinary course of human affairs and is against the spirit of law." What he is required to consider is not the legal validity of the transaction but the bona fides of the transaction, and the standard offered by the actual rent can be rejected only if it is found to be lower than the rent which may be reasonably expected from the hypothetical tenant, or in other words, if it is found that because of the relationship between the parties, payment of a large selami and the like, a rent lower than what other intending lessees were prepared to offer was stipulated. No evidence on any of these points was taken by the Assessor. Before rejecting the test of actual rent in toto, the Respondents must take evidence on these points and at the fresh assessment which I am going to direct, the Petitioners shall be at liberty to produce the alleged deed and also adduce evidence to establish the bona fides of the alleged settlement. Before rejecting the test of actual rent in toto, the Respondents must take evidence on these points and at the fresh assessment which I am going to direct, the Petitioners shall be at liberty to produce the alleged deed and also adduce evidence to establish the bona fides of the alleged settlement. In default of such production, the Respondents shall be entitled to hold that the actual rent or the lease alleged is fictitious. But if the lease be found to be bona fide, the Respondents shall not be entitled to assess according to the highest rent which some other intending tenant might possibly offer in a speculative market of abnormal conditions, because, as observed by the Court of appeal in (15) R. v. School Board, (1886) 17 Q. B. D. 738, the ' assessee himself is entitled to be taken into account as among the possible hypothetical tenants, so that the rent which the Petitioners as bona fide lessees, are prepared to offer is also to be taken into account in determining the rent which may be 'reasonably expected' by letting out the premises [vide also (16) London County Council v. Erith and West Ham, (1893) A. C. 562 (588) ]. The assessment, in short, must be reasonable, as held by our Supreme Court. In this context, I should also observe that the Petitioners cannot be called upon to disclose their profits and to produce their account books, because the tax authorised is a tax on the holding and not on its profits [vide (8) Cartwright v. Sculcoates Union, (1900) A. C. 150 (155)]. 11. IT is clear from the foregoing discussion that the Respondents have failed to determine the "gross annual rental at which the holding may reasonably expected to let", as required by section 128 (1) of the Act and that there has been a contravention also of rr. 8 (a), 10 and 14 of the Rules framed under the Act and that the impugned assessment as finally made by the Review Committee by its order dated May 21, 1959, is ultra vires. As has been observed in cases in England as well as in India [of. (17) Abdullabhoy v. Executive Committee, (1918) 42 Bom. 8 (a), 10 and 14 of the Rules framed under the Act and that the impugned assessment as finally made by the Review Committee by its order dated May 21, 1959, is ultra vires. As has been observed in cases in England as well as in India [of. (17) Abdullabhoy v. Executive Committee, (1918) 42 Bom. 692 (713)], when a valuation is challenged before the Court as ultra vires, it is not the business of the Court to advise the assessing authority what, precisely, should be the legal valuation for the premises in question. 12. THE only thing the Court should do is to quash the illegal valuation and direct the rating authority to make a fresh assessment according to law. The statutory provisions relating to the valuation in question before me and the matters relevant thereto have been explained in this judgment. In the result, this application must be allowed and the Rule made absolute. Let a writ in the nature of mandamus do issue directing the Respondents not to give effect to the impugned assessment and to make a fresh assessment in accordance with the law and in the light of the observations made herein. In view of the fact that the Petitioners have not rendered much assistance to the Respondents in the matter of assessment, I would not award any costs to the Petitioners though successful ; on the other hand, I would order them to pay the costs of this hearing, assessed at ten gold mohurs, to the Respondents.